Islamabad is conducting a diplomatic effort to win over Saudi Arabia (KSA) and Chinese giant Sinopec, known for installing refineries, to set up the $10 billion state-of-the-art and deep conversion refinery with the capacity to refine crude oil at 300,000 barrels per day (BPD) in Pakistan.
“The authorities in the Kingdom of Saudi Arabia have been requested to be approached by Pakistan’s ambassador to Saudi Arabia in order to facilitate the project’s development. Senior officials who were aware of the development informed that the Foreign Office has also been instructed to support the project’s pursuit through diplomatic channels, especially by encouraging Sinopec in China to pursue it and include it into the larger project.
After the failure of PSO’s top management and Petroleum Division mandarins to persuade Saudi Aramco and secure approval from Sinopec, the nation’s highest decision-making body, SIFC, has instructed the Foreign Office to open efficient diplomatic channels in order to facilitate the project’s implementation.
The Pakistani government has unveiled a new green refinery policy, offering incentives such as a 7.5% deemed duty for 25 years and a 20-year tax holiday, aligning with Saudi Arabia’s preferences. Initially, engineering, procurement, and construction (EPC) contracts were awarded to China’s Sinopec at the request of Saudi Aramco.
However, Aramco has since distanced itself from the Saudi government and expressed disinterest in global refinery investments, favoring a crude-to-chemical petrochemical complex in Pakistan. In response, a diplomatic initiative has been initiated to engage Sinopec in the $10 billion green refinery project, with negotiations conducted through diplomatic channels.
The proposed project involves a 30:70 equity-loan ratio, with Saudi Aramco and Pakistan sharing the equity, while Aramco arranges $7 billion in loans through international financial institutions. The China Road and Bridge Corporation (CRBC) is also set to contribute to the project by arranging loans from Chinese banks. Despite progress, Pak Arab Refinery Company (PARCO) has not signed the Memorandum of Understanding (MoU).
